Transition From PBM to PBA Model: A Case Study in Innovative Contracting
PBMI Drug Benefit Conference 2014
Craig Stern, PharmD, MBA, President
Pro Pharma Pharmaceutical Consultants, Inc.
February 4, 2014
GOALS
Determinative Pricing
Trend Variation Minimized
Cost Anchored to Manufacturer Price Inflation
Oversight of Cost with ability to make mid-term corrections
Oversight of Provider Performance
Allow for more Innovative Provider Performance standards
PBA MODEL
PBA Responsibilities Claim Administration Network Management
Networks Custom Retail Custom Chain National Wrap
Fee Schedules Health Plan responsible for fees Custom MAC
MODEL PARAMETERS
Cost Contraction based on “lesser of logic”
Elimination of “middle-man” incentives
Trend Management
PBA Administrative Services only arrangement
Ongoing Oversight
TERM SHEET ELEMENTS Any multisource, branded generic, or OTC that is available from at least one generic
manufacturer will permit the member to pay generic co-pay
All drugs shall be dispensed as generic unless stipulated as DAW 1.
All drugs dispensed shall comply with the HP benefit design and formulary requirements
All claims will be priced according to “lesser of” logic on a per-claim basis.
“Lesser of” logic on a per-claim basis is based on the lesser of the AWP or WAC negotiated discount, the usual and customary as published by the pharmacy for non-membership patients, or the HP MAC. Dispensing fee will be added to the “lesser of” price.
The HP MAC is based on “lesser of” pricing including, but not limited to, the AWP or WAC negotiated discount, the State Medicaid MAC, the CMS FUL, or the usual and customary as published by the pharmacy for non-membership patients.
The HP MAC will be published on the web and updated monthly.
TERM SHEET ELEMENTS
All claims shall contain valid and identifiable information including but not limited to: a) Member’s Identification including the Member number; b) valid NDC of the medication prescribed (that has not been termed by the
manufacturer or CMS); c) valid NPI or DEA for the prescribing physician as published by nationally
recognized databases; d) the package size of the medication dispensed; e) the quantity of the medication dispensed; f) estimated days’ supply; g) the correct DAW for Brand medications dispensed, if applicable; h) the strength of the medication dispensed.
DEFINITIONS: SPECIFIC DESIRED ELEMENTS
AVERAGE WHOLESALE PRICE or (AWP) = WAC*1.2 and as set forth in the current price list in recognized sources such as Medi-Span, including its supplements, or other nationally recognized pricing source, including the Covered Manufacturer’s published AWP. However, if Medi-Span or the Covered Manufacture published AWP is in excess of the statutory definition, then PBM will be responsible for changing the published AWP to the post-settlement statutory AWP. The applicable AWP for prescriptions dispensed shall be based on the actual package-size submitted based on the 11 character NDC.
BRAND NAME DRUG means a brand name drug marketed under a proprietary, trademark-protected name (http://www.fda.gov/Drugs/default.htm).
CLEAN CLAIM is defined as an Rx not requiring any clarification from an MD and also includes complete and legible prescribing information from an actual doctor, for an eligible patient, actual valid pharmacy, and containing drug information such as valid and active NDC (Drug Name, Strength, Directions, MD Signature, and Quantity or Duration of Therapy).
GENERIC DRUG means a drug that is identical--or bioequivalent--to a brand name drug in dosage form, safety, strength, route of
administration, quality, performance characteristics and intended use. A generic drug is a medication approved by the FDA with an ANDA. An Abbreviated New Drug Application (ANDA) contains data that, when submitted to FDA's Center for Drug Evaluation and Research, Office of Generic Drugs, provides for the review and ultimate approval of a generic drug product. (http://www.fda.gov/Drugs/default.htm).
DEFINITIONS: SPECIFIC DESIRED ELEMENTS
MAXIMUM ALLOWABLE COST (MAC) means the maximum allowable cost of a drug pursuant to a list published by HP that establishes an upper limit reimbursement price for certain multiple-source drugs dispensed without regard to the specific manufacturer whose drug is dispensed. The MAC must be consistent with, and no more than, “the lesser of” the State Medicaid MAC, the CMS Federal Upper Limit (FUL), the Usual & Customary charge, or the contracted AWP discount on a per-drug basis.
NATIONAL PROVIDER IDENTIFIER (NPI) is a unique identification number issued by NCPDP for use by covered health care providers to identify Prescribers as required by the Health Insurance Portability and Accountability Act (HIPAA) Administrative Simplification Standard.
REQUIRED INFORMATION means complete, identifiable (and if submitted on paper, legible) Claim information required by the PBM contracted with the Health Plan. Required Information includes without limitation (a) Member’s identification number; (b) NDC of the medication prescribed; (c) the bottle size from which the medication is dispensed; (d) quantity of the medication dispensed; (e) estimated days supply of medication; (f) the correct DAW code for brand name medications; (g) an NPI number; (h) codes and cost information as designated by PBM for compound prescriptions; and (i) sales tax amounts.
WHOLESALE ACQUISITION COST (WAC) means a Pharmaceutical Company’s wholesale price for a drug provided by a Pharmaceutical Company to third-party pricing sources (e.g., Medi-Span) for inclusion in their price databases.
CUSTOM MAC
Predicated on “Lesser of” Logic
Elements Include:
State Medicaid MAC
Federal Upper Limits (FUL)
Contracted AWP Discounts
ALL Generics Included
Pricing Updated Monthly
Published on Secure Website available to entire networks
DIRECT CONTRACTING WITH CHAIN NETWORKS
Geo-Access Analysis
Identification of Major Players
Term Sheet for Negotiations
Custom MAC Vetting
Continuity of Rates Across the Networks
Restricted Network Acceptable if necessary
DIRECT PROVIDER CONTRACTING
PROS
Direct Contracting Preferable to Chains
Transparency in All Pricing
CONS
Network Management / Oversight
MAC Fixed Fees vs. GER
Restricted Network / Restricted Access
Local vs. National Contracting
OVERSIGHT & MANAGEMENT OF THE PBA MODEL
Review of Plan Design Worksheets to ensure claim adjudication logic consistent with benefit logic
Screening of Invoices
Accounts Payable reviews at every invoice
MAC Updates Monthly and more frequently for access issues
Monthly Financial and Clinical Performance Reviews
Pro Pharma
Pharmaceutical Consultants, Inc.
P.O. Box 280130
Northridge, CA 91328-0130
(818) 701-5438
(818) 701 – 0249 Fax
Email: [email protected]
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